Sampling the sectors

PeterBrimelow

NEW YORK (CBS.MW) -- The stock market didn't seem particularly thrilled by the unexpectedly good employment numbers Friday. But, hey, there's still all kind of optimism around.

Look at the sector letters.

These are the investment letters that advise you how to switch between the various mutual funds that focus on specific market sectors.

The Hulbert Financial Digest has data on about a couple dozen such letters.

Of these, seven have beaten the market:

All Star Fund Trader

Dennis Slothower's On The Money

Fidelity Independent Advisor

Fidelity Monitor

No Load Mutual Fund Selections & Timing

Peter Eliades Stock Market Cycles

Timer Digest

And there's no doubt that the weight of these market-beating letters is bullish.

Well, there's some doubt. Timer Digest is in the market because its "Top Ten Consensus" of market timers is bullish. But its "Top Long Term Timers" are marginally bearish.

Still, listen to All-Star Fund Trader last week:

"It's a joy to behold a good uptrend with long legs again. Throughout the bear market, we were constantly frustrated by rallies that evaporated just as quickly as they could be identified. This time, at last, it's different...So life is good, the economy is improving, and we are invested in such a way as to take advantage of it. Stay tuned."

Oh, you know the feeling? Well, perhaps you'd like to know that one of All-Star's holdings is the highly-leveraged Rydex Mekros Fund
RYMKX, +0.19%

And All-Star has company: According to a press-time data run provided by Mark Hulbert, one other sector letter among those followed by HFR currently recommends Mekros.

Another market-beating bull is Dennis Slothower of On The Money. He wrote recently:

"It appears we are now shifting into phase two of this bull market. The first phase of the rally came as a result of the substantial growth in the money supply in the May/June period ... we are now entering into the second phase of this bull market, which is a profit-driven advance.

"My forecast (and take this for a grain of salt) is for the primary trend to remain positive until the January/February period then watch for a more meaningful correction to develop in the February/March period, followed by another bull market phase into the April/May period."

One of Slothower's recent moves: selling the Rydex Large-cap Japan fund
RYJPX
and moving the proceeds to the money market, because of U.S. dollar strength.

That's bold: two other letters in followed by the HFD still hold The Rydex Large-cap Japan Fund. (See below).

Of course not all the five-year sector letter market beaters are bullish: Peter Eliades of Stock Market Cycles has finally given up his effort to catch what he has always regarded as a bear market rally. (See my Sept. 18 column).

In a hotline last Monday, Eliades noted that

"...today's closing prices satisfied virtually all closing price projection windows except for the Dow Jones Industrial Average. The minimum upside projection on the Dow required a close of 9878. Today's close of 9,858.46 was just under 0.2% away from that projection. Remember that the intraday projections call for still higher prices, a minimum of 9964 on the Dow...The important fact remains that virtually all upside closing projections have now been satisfied at least on a minimal basis. If tomorrow we see the intraday projection satisfied, the evidence will be very strong that a top of perhaps greater proportions than anyone can now imagine is being formed. "

You have to understand Eliades' unusual cycle approach to grasp what he's saying here; i.e., hitting targets is bad.

But in fact at week's end the Dow
DJIA, -0.67%
had not yet reached his target close, although there was an intraday high of 9,945.71 on Friday.

Here's a list of the sector funds currently held by the letters monitored by the HFD, some of which have superior performances but not yet a five-year HFD record. Holdings by five-year market-beaters are indicated in [brackets].

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